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07 Jul 2012, 04:49

The following appeared as part of an annual report sent to stockholders by Olympic Foods, a processor of frozen foods:“Over time, the costs of processing go down because as organizations learn how to do things better, they become more efficient. In color film processing, for example, the cost of a 3-by-5-inch print fell from 50 cents for five-day service in 1970 to 20 cents for one-day service in 1984. The same principle applies to the processing of food. And since Olympic Foods will soon celebrate its 25th birthday, we can expect that our long experience will enable us to minimize costs and thus maximize profits.”Discuss how well reasoned . . . etc.

The argument claims that the cost of processing goes down as the firms become more efficient over time. Citing the example of the color film processsing industry, where the cost of a print fell down from 50 cents for five-day service in 1970 to 20 cents for one-day service in 1984, the author claims that this should also be applicable to the food industry. Although the author's argument might well have merit, stated in this way the argument fails to mention several key factors, on the basis of which it could be evaluated. The conclusion is based on questionable premises and assumptions, and based solely on the evidence that the author provides, we cannot accept the argument as valid.

First, the author readily assumes that the reason for a drop in the cost of a print is the improved efficiency in processing. This statement is a stretch since there are many different factors which affect the cost of processing. For instance, it is possible that the cost of raw materials or the cost of labor might have gone down from 1970 to 1984. It would be illogical to think that the improved effeciency is the sole reason for the observed drop. Furthermore, the author mentions the drop considering only 2 particular years. It is possible that 1984 was an exceptional year in terms of processing efficiency or for other reasons. To illustrate, the price of a print might have been increasing since 1970 but due to a sudden drop in the prices of raw materials in 1970, the cost of a print went down. The argument could have been strengthened if the author gave legitimate evidence stating processing efficiency is the primary reason for the reduction in costs, and provided cost trends showing a consistent decline.

Second, the author claims that since costs went down in the color film processing industry, this can also be expected in the food processing industry. This is again a very weak and unsupported claim as the argument does not demostrate any relation between the film processing and food processing industries. It would not be wise to assume that the two industries are similar. Clearly, food processing industry works in a different domain characterized by its own cost related factors. For example, it is certainly possible that inflation and labor costs affect food processing industry differently than they affect the film processing industry. In fact, it is not at all clear whether there is any sort of similarity between the two industries. If the argument had provided clear evidence that the two industries have similar cost mechanisms, the argument would have been a lot more convincing.

Finally, the argument provides no explanation on how Olympic foods will actually use its 25 years of experience to minimize costs and maximize profit. Some steps that Olympic foods have taken to minimize costs would have helped assess the argument better. However, without convincing answers to these questions, one is left with the impression that the claim is more of a wishful thinking rather than substantive evidence.

In conclusion, the argument is flawed for the above mentioned reasons. In order to assess the merits of any situation, it is essential to have full knowledge of all contrinuting factors. If the author truly hopes to change his or her readers'minds, he or she would need to largely restructure the argument, fix flaws in logic, clearly explicate the assumptions and provide legitimate evidentiary support. Without this information, the argument remains unsubstantiated and open to debate.